Brand Protection in the Metaverse
What was once an afterthought dismissed by the masses as something too complicated to understand has trail blazed its way into the everyday life of our lives. In order to understand this new technology and how it applies to the licensing agreements of the branded products we wear everyday in the ‘real’ world, we must explore exactly what is the “metaverse”. To put simply, the metaverse could be understood a quasi-successor to the mobile Internet.[1] Meaning, instead of building an entirely new web platform, the metaverse is grasping at things we use in our physical lives and combining them with a web-based platform that is built off of the Internet.[2] Brands from Nike to Gucci are generating tons of revenue just by dipping their toes into the Metaverse marketplace.[3] Just recently popular athletic wear brand RTKFT (a subsidiary of NIKE) sold 600 pairs of limited edition shoes that can be worn by your avatar in the Metaverse.[4] Not only did these shoes sell out in under seven minutes, but the company was able to generate a whopping 3.1 million dollars from the sales.[5]
While major companies see the potential for major profits in the metaverse, the lines are blurred as to how to ensure “knock-off” brand products don’t infest the metaverse as they do in the physical world. What seems to be the most viable means of the combatting of “counterfeit” products in the metaverse is designer brands utilizing Non-Fungible Tokens (“NFTs”) to ensure consumers that the product they purchase was authentically produced.[6] This is obtainable because NFTs are cryptographic assets on a blockchain with unique identification codes that distinguish them from each other.[7] When an NFT is produced and sold on the blockchain, attached to it is a descriptor, or digital tag, that shows exactly who has owned that NFT and where was it transferred from.[8] The trade of a product can be traced all the way back to the product’s creator, making it easy to decipher whether a counterfeiter or a real brand was the original producer of the digital asset.[9]
While using an NFT and blockchain verification is a new means of protecting products produced on a blockchain network, traditional legal avenues are available as well. Forward-thinking brands have come to realize with the evolution of technology it would be extremely difficult to protect their brand if early action is not taken.[10] Brands such as Nike have recently been utilizing licensing agreements to protect insignias that are unique to their brand such as the Swoosh, “Just Do It,” and the Jump Man logo.[11] According to Nike’s outside trademark counsel Josh Gerben, adding trademark and copyright filings to a brand’s portfolio (like Nike’s) not only protects their brand’s image, but also adds value to the company.[12] The added value comes from the newly-available protection of the brand in newer forms of property owned by the company.[13]
While it is expected that both federal and state level governments are going to begin regulating both consumer and producers’ needs within the metaverse, as of now no definitive law is in place for the protection of either entrant. It will be important for entities to closely monitor these new policies/regulations and keep an eye on the European General Data Protection Regulation (“GDPR”) and/or the US Digital Millennium Copyright Act (“DMCA”) for additions addressing virtual-based technology and privacy, such as those aspects of the metaverse.[14] Going forward it will be interesting to see which direction industry giants will be taking to ensure their products are safe in the metaverse.
Footnotes
